The indexes reversed down from an extremely overbought condition today; now will we get a correction that lasts more than a day or two? We still prefer a test of the critical support levels of 1540-1550 on the Nasdaq and 945-948 on the S&P (see first two charts below). The Dow (third chart) is back below 9000, but in the scheme of things, that’s not a big deal since the Dow Theory buy signal was given last week. We don’t see that index hitting major support until 8600-8750. The daily charts (three through six) also give support in our target areas. To the upside, 1623-1625 on the Nasdaq, 979 and 986.82-987.76 on the S&P, and 9000 and 9061-9066 on the Dow are resistance.
Don’t miss the Company of the Week – every week – at http://www.wsrn.com/COW/.
Special report: For a free introduction to technical analysis and chart patterns, visit http://www.internetstockreport.com/guest/article/0,1785,2571_5/00051,00.html.